New RESPA rules on the Good Faith Estimate (GFE) and Settlement Statement (HUD-1) took effect on January 1, 2010. To promote lower borrowing costs and the ability to shop around for settlement services, HUD’s new disclosure rules require certain fees to be no more than 10% higher in the HUD-1 presented at loan closing than those fees were in the GFE. Otherwise, the lender absorbs the difference.

Lenders seem to be all over the board with the new GFE requirements. Some lenders and settlement providers may be listing the most conservative estimates to avoid being penalized. Others believe that HUD granted a 4-month delay before the new rules set in.

Certain GFE items such as title insurance premiums and state transfer taxes are posing problems. Lenders seem to want more simplified “all inclusive” title insurance and escrow rates. But, title insurance is regulated by RESPA and various states. It is not priced the same in every state. Some states allow “all inclusive” rates, while other states want title insurance rates to be more detailed and transparent.